BELOW BREAKEVEN

He quotes the managing director of a $2 billion-plus retail group: 'Even a 10% loss in consumers visiting our stores would be a worry. For many of our outlets, that would push us below breakeven'. The author's consultancy, CSC Kalchas, reckons from its own research that 'average retailer margins will be eliminated by a 15-20% reduction in consumer traffic through their stores'. Against this dynamic background, M&S is conducting a leisurely 18-month strategy review. In that time, usage of the World Wide Web, doubling every 100 days, will have multiplied over 30 times.

The IBC seminar mentioned above heard about many aspects of the only policy that can work in such circumstances: transformation. In starting that process, don't think about 18 months. A former chairman of ICI once told me confidently that 'you can't turn around a large company like this every 18 months'. He would not have recognised today's landscape in which, according to Alan Stevens, managing director of EDS in the UK, the time between corporate restructurings has generally halved - to 18 months.

ICI itself has in recent years disposed of its best business (the aforementioned Zeneca), shifted its entire focus from commodity chemicals to specialisms - and yet has still failed to crack its strategic growth problems. As Stevens went on to observe, you can't grow dynamically on the wrong structure. Just as information technology has progressed from high centralisation (the mainframe) to distributed processing (the mini-computer) to total decentralisation (the PC and the Internet), so freeing up corporate structures along the same route offers the same benefits in speed, responsiveness and flexibility.

In this process, the first 18 weeks are much more important than the first 18 months. A third of a year is quite long enough to prove that anything which requires changing will be changed, that no cows are sacred any more, and that the new technology will be embraced until it permeates every process in the business - from people management to customer satisfaction (two sides of the same coin), from 'knowledge management' to achieving radical and continuous change.

The precondition of successful transformation, as Terry Neill of Andersen Consulting told the IBC seminar, is to close the gap between management's perception of present reality and the truth. My own consultancy work in financial services shows how wide this gap can become. The large and rich companies concerned spend heavily on advertising and new products, and are convinced that they have established meaningful distinctions between themselves and their competitors. The reality is that the market can't tell them apart.

The featured speaker at the seminar, Gary Hamel, has a convincing explanation. Companies in the same industry tend to follow the same road. They even benchmark against competitors to ensure that they are doing the same things at least as well, preferably better. But no lasting advantage can be gained from marching in step. By far the most successful financial services firm today is Charles Schwab, which turned the investment industry upside-down by being wholly different. Schwab didn't emulate the established industry: it forced its rivals to follow its lead - too late to prevent Schwab's upsurge.

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